With July behind us, it was once again to review monthly charts and many were quite interesting. The S&P500 negated it's monthly sell signal in May by exceeding it in July. Not only that, but prior 2000 resistance clearly turned into support in June with the market confirming that market strength with a solid July close near the high. My stop (alert since I don't use stops) is now below June's low. (Click charts to enlarge)
Why the market strength? It could be any number of reasons (or none of these at all):
- The belief QE will remain the new normal with such a weak jobs recovery
- Global easing
- Money is coming in off the sidelines (doubtful)
- Money coming out of bonds into equities (some is but not all)
- Belief that Europe and Asia have bottomed
- Housing recovery and the amount it contributes to job growth and GDP.
- Hope Obama's proposed Corporate tax cut passes
- Anticipation of China growth
- Anticipation of earnings growth
- Well the pundits said the 2nd half of the year would be better, right? idk how but they wouldn't lie, right?
- Search for yield
- Energy sector strength
It's all speculation at this point but we're chugging our way towards $1750, possibly even higher by year end. In fact this weeks Commitment of Traders report is nothing but bullish in S&P e-mini futures.
To all those blogs and websites who continually said the sky was going to fall and we would double dip "do you work for Goldman Sachs to intentionally bring in shorts so the market can gobble them up and fuel us higher?" Clearly sequestration and tax hikes were just smoke screens (once again) and the market doesn't seem to care (so far) about September debt ceiling (another wall of worry).
Just stop asking why. Stop buying the doom and gloom. Move up your stops and if/when the market does give us a solid correction, you'll be out...........and waiting to buy when everyone else is afraid.
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